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Altair Announces First Quarter 2018 Financial Results

TROY, Mich., May 14, 2018 (GLOBE NEWSWIRE) -- Altair (Nasdaq:ALTR) released its financial results for the first quarter ended March 31, 2018.

“Altair started 2018 with a strong financial performance highlighted by software product revenue growth of 26% and profitability that exceeded expectations,” said James Scapa, Founder, Chairman and CEO. “Our performance in the first quarter reflects good execution, improving market dynamics and the positive impact of the investments we have made to strengthen our product portfolio and go-to-market team.”

Scapa continued, “We have further enhanced our solution set with the recent acquisitions of CANDI, which extends our capabilities around edge gateway computing and the Internet of Things, and FluiDyna, a developer of GPU-based fluid dynamics and numerical simulation technologies. These are exciting technologies that increase the value Altair can deliver for customers and exemplify our expanding number of opportunities for future growth.”

First Quarter 2018 Financial Highlights

Software product revenue was $68.1 million, an increase of 26% from $54.1 million for the first quarter of 2017.

Total revenue was $91.7 million, an increase of 19% compared to $76.9 million for the first quarter of 2017.

Net income was $3.9 million, compared to net loss of $(2.2) million for the first quarter of 2017. Diluted net income per share was $0.05, based on 72.4 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.04) for the first quarter of 2017, based on 50.1 million diluted weighted average common shares outstanding.

Adjusted EBITDA was $7.7 million, compared to $2.9 million for the first quarter of 2017. Adjusted EBITDA represents net income (loss) adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as determined by management.

Non-GAAP net income was $6.1 million, compared to $1.6 million for the first quarter of 2017. Non-GAAP net income per share was $0.08, based on 72.8 million diluted weighted average common shares outstanding, compared to $0.03 for the first quarter of 2017, based on 61.2 million diluted weighted average common shares outstanding. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions and certain tax adjustments.

Cash flow from operations was $26.7 million, compared to $19.2 million for the first quarter of 2017.

Free cash flow, which consists of cash flow from operations less capital expenditures, was $25.0 million compared to $18.2 million for the first quarter of 2017.

Business Outlook

Based on information available as of today, Altair is issuing forward-looking statements on guidance for the second quarter and full year 2018 as indicated below.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our business outlook, potential growth, market positioning and future investments, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

Property and equipment in accounts payable and other accrued expenses and current liabilities

$

736

$

64

Capital leases

$

565

$

—

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure (in thousands):

(Unaudited)

Three months ended March 31,

2018

2017

Net income (loss)

$

3,920

$

(2,188

)

Income tax expense (benefit)

1,234

(772

)

Stock-based compensation expense

216

2,869

Interest expense

16

611

Interest income and other(1)

(1,255

)

(85

)

Depreciation and amortization

3,543

2,474

Adjusted EBITDA

$

7,674

$

2,909

(1) Includes a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income and a non-recurring adjustment for royalty contracts resulting in $0.9 million of expense for the three months ended March 31, 2018.

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP diluted earnings per share to net income (loss) and earnings (loss) per share - diluted, the most comparable GAAP financial measures (in thousands):

(Unaudited)

Three months ended March 31,

2018

2017

Net income (loss)

$

3,920

$

(2,188

)

Stock-based compensation expense

216

2,869

Amortization of intangible assets

1,940

943

Non-GAAP net income

$

6,076

$

1,624

Earnings (loss) per share - diluted

$

0.05

$

(0.04

)

Non-GAAP earnings per share - diluted

$

0.08

$

0.03

GAAP diluted shares outstanding:

Weighted average number of shares used in computing net income (loss) per share, diluted

72,390

50,132

Non-GAAP diluted shares outstanding:

Weighted average number of shares used in computing net income per share, diluted

72,800

61,200

The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure (in thousands):

(Unaudited)

Three months ended March 31,

2018

2017

Net cash provided by operating activities

$

26,689

$

19,202

Capital expenditures

(1,684

)

(969

)

Free cash flow

$

25,005

$

18,233

The following table provides a reconciliation of projected net income to projected Non-GAAP net income, the most comparable GAAP financial measure (in thousands):

(Unaudited)

Three months ending

Year ending

June 30, 2018

December 31, 2018

low

high

low

high

Net income

$

500

$

1,000

$

11,000

$

13,000

Stock-based compensation expense

500

500

2,000

2,000

Amortization of intangible assets

1,500

1,500

6,000

6,000

Non-GAAP net income

$

2,500

$

3,000

$

19,000

$

21,000

The following table provides a reconciliation of projected Adjusted EBITDA to projected net income, the most comparable GAAP financial measure (in thousands):